State economic outlook goes from bad to worse

A new forecast suggests Florida will face a $3.5-billion budget hole in the 2009-10 fiscal year, almost double the shortfall the state currently faces.

That prediction combines an anticipated tax revenue shortfall of $2.2-billion and the growing cost of meeting the state's legal and constitutional obligations including prisons, courts and its share of the Medicaid health care program for the needy.

State economists on Aug. 15 had predicted Florida would collect $1.8-billion less than previously anticipated during the current budget year.

House and Senate members of the Legislative Budget Commission received a presentation on the latest bad economic news from Amy Baker, the Legislature's economic and demographic research coordinator.

"No one is in a panic mode," said House Policy and Budget Chairman Ray Sansom, R-Destin. "None of this is a surprise."

Sansom, who's also in line to become House speaker in November, said the commission and Gov. Charlie Crist can tap reserve funds to meet the current shortfall under a new law passed earlier this year. That won't help, though, when lawmakers convene in regular session next spring to write the 2009-10 budget.

Sansom said he wants to wait for the next revenue estimate — the one Crist will use in making his budget recommendations — in November before focusing on the 2009-10 money gap. "We'll deal with these issues one fiscal year at a time," he said.

Sansom said the budget commission expects to consider Crist's recommendations for dealing with the current-year shortfall at its Sept. 10 meeting.

Crist could ask the commission to fill the gap with about $600-million from a budget reserve fund and up to $1-billion from the Lawton Chiles Endowment, which invests money from the state's tobacco settlement for future use on children's and health programs.

The governor has said he doesn't expect to seek the full amount because the current budget carries over about $326-million in unspent cash from last year, and he's asked state agencies to hold back spending by 4 percent.

Sansom said he has met with Supreme Court Chief Justice Peggy Quince to discuss her warning that the holdback could result in layoffs and slowdowns in the state's court system.

"That certainly would be the last thing you want to see happen," Sansom said.